Accounts Payable Workflow Automation: Tips & Examples

When it comes to accounting teams in businesses, there are many workflows to stay on top of. It’s of utmost importance that all data is accurate, transactions are properly recorded, and payments are made and received on time. Let’s take a look at how accounts payable workflow automation could be a gamechanger for your business.

Coming Up

1. What is a Workflow?

2. What is the Manual Workflow in Accounts Payable?

3. What is Accounts Payable Automation?

4. What are Accounts Payable Automation Examples

5. What are the Benefits of Accounts Payable Automation?

6. How to Automate Accounts Payable Workflows?

7. How Can Accounts Payable be Automated?

8. What are Common Features of Accounts Payable Automation Software?

9. The Bottom Line

What is a Workflow?

A workflow refers to any sequence of steps required to fulfill a task or process from beginning to end. With workflows that are clearly designed and defined, you can ensure everyone knows what the end goal is and how the company will achieve it.

Workflows can be manual or automated. Let’s see how they differ because it becomes very clear that automation is the way to go.

What is the Manual Workflow in Accounts Payable?

While it’s possible to perform the accounts payable process manually, it’s less than optimal for a variety of reasons. Let’s look at the process, as well as the potential challenges that exist at each step.

1. Receive Invoices

Accounts payable (AP) departments receive paper invoices and have to type the data into the electronic system for approvals by business leaders/management.

At this step, there may be delays in receiving invoices, invoices can be lost, there may be thousands of them to enter, manual errors arise with data entry, etc.

2. After Approval

After the invoices are approved, the AP department has to make sure that they get signatures, cut paper checks, and mail them out to vendors and suppliers. Not to mention, there’s the need for approval within these steps.  

Say that the key person is out of office, so you are unable to receive the signature, which means that your vendors and suppliers are going to wait longer for payment, which can strain your relationships.

Additionally, there’s risk in writing the check amount incorrectly or the cheek being stolen, leaving room for frauders to steal from the business).

What is Accounts Payable Automation?

AP automation workflow takes the hassle out of the accounts payable processes by making it all seamless. Here’s how it works:

1. AP automation software (like SolveXia) will transform paper documents and invoices into a digital format. This way, everything is uploaded without error into a centralised and secure system for easy processing and historical review.
   

2. The system will perform matching to ensure that invoices and the purchase order data matches.
   

3. Should there be a mismatch, the system will alert your finance team of the issue for rectification.
   

4. After they are approved, they move into the accounting and ERP systems so that electronic payments can be made automatically or a check can be cut.

What are Accounts Payable Automation Examples

Accounts payable workflow automation works at any step of the process. Here are some examples of what it looks like in action:

Data Population

When performed manually, processing invoices can be a time-consuming endeavour. With automation, you can save a lot of time and energy as your database is connected to your workflow.

So, your database has the power to automatically input forms with necessary data from invoices to receive approval for payment.

Data Validation

Before paying invoices, you want to check that the amounts and services rendered reflect your agreement in the purchase order. Automation solutions like SolveXia can perform data validation accurately and quickly.

Payment Approvals

In most companies, there needs to be sign-off before any invoices get paid. You most likely have an approval process already set up, but it probably involves key person dependencies and could be the cause of bottlenecks.

When everything takes place in an automated system, the person is alerted when it’s time to approve an invoice and reminded to do so, as opposed to paper approvals getting lost on their desk.

Plus, if the key person is out-of-office, they can access the system from wherever they are to keep work moving forward.

What are the Benefits of Accounts Payable Automation?

As you can already see, there are many benefits to implementing accounts payable workflow automation. For the sake of organisation, let’s recap them here:

1. Timely Payments

By performing manual accounts payable processes, you increase the risk of human error. When data is input incorrectly, then you will have delays in processing and paying invoices. Automated systems reduce errors so that the process can flow smoothly.

This way, your suppliers and vendors get paid on time, thereby, preserving your solid working relationship. No one likes to chase invoices or pay them late.

2. Avoid Penalties

Besides the risk of negatively affecting your working relationships, you may face financial downfalls from paying invoices late. Some vendors and suppliers charge late fees. You can avoid such fees with accounts payable workflow automation.

3. Mitigate Fraud

It could happen that your accounting department receives an invoice from a vendor that you never actually did business with. In the shuffle of things and the processing of so many invoices, they could simply pay it off without thinking twice.

In this case, you’ve just paid a frauder and received nothing. With an accounts payable automation workflow in place, the system will check your invoices against your suppliers/vendors list and purchase orders to ensure legitimacy before processing takes place.

4. Save Time

The process of manual data entry can take a lot of time, and the extent as to how long it can take will depend on how many invoices your team has to enter for payment. Do you really want your high-level employees wasting their valuable time on entering numbers into a system when an automation solution can do this for you?

5. Audit Trails

Auditors may want to have a look at your company’s financial records and transactions. With an automation workflow system in place, this process becomes as easy as clicking a few buttons to create an audit report.

Plus, your internal team will always be able to access historical data and transactions as it’s securely stored in the system.

6. Streamlined Approval Process

If performed manually, your finance team may have to constantly chase down business leaders for approvals and signatures to pay invoices. This is not only a waste of time and frustrating practice, but it also is not organised.

By implementing an accounts payable workflow automation solution, the system will regularly follow up with the approver to ensure that invoices are reviewed in a timely manner and not forgotten.

How to Automate Accounts Payable Workflows?

So, are you ready to automate accounts payable workflows in your organisation, but feel unsure as to where to begin?

Take a look at these steps for how to go about it:

1. Map Out Your Current Process

Before you design your process in an accounts payable workflow automation solution, you’ll want to review that it is, in fact, designed optimally. Map it out to remove any inefficient or unnecessary steps that may exist.

2. Get Buy-In

You’ll likely need support from management and stakeholders as to the benefits of deploying an automation solution. Take the time to review your manual process and make a case as to why it’s causing more harm than good. Then, showcase all the ways in which an automation solution can prevent these issues.

3. Prioritise Needs

Perform an assessment as to which aspects of the accounts payable process is the most flawed with your current way of working. This way, you’ll be able to prioritise your needs and select a finance automation solution that can work best in your favor.

How Can Accounts Payable be Automated?

Once you select the system that suits your needs, you can create your accounts payable workflow automation process simply.

For example, with an automation tool like SolveXia, you can use a pre-built accounts payable workflow and then tailor it to your company’s specificities using drag-and-drop functionality.

If you’re thinking, “Wow, I don’t need to know how to code?” then you’re absolutely right. You do not need to know how to code to start automating your processes right away.

After you’ve designed your standard accounts payable process, then work on your approval process workflow. After you’ve deployed the process, you can run them either attended (with human involvement) or unattended (no humans necessary).

Using real-time insights and data, you can review the process and perform process improvement, should you find any need to.

What are Common Features of Accounts Payable Automation Software?

There are many accounts payable automation software to choose from. Let’s review the key features that you’ll want in your chosen solution (suffice it to say a tool like SolveXia checks all the boxes):

• Ability to customise workflows
• No-code or low-code environment
• Process large volume of documents at once
• Data matching between purchase orders and invoices
• Comply with accounting standards
• Ability to integrate with existing tech stack and accounting software
• Centralised system to capture and securely store data

The Bottom Line

Reports have shown that the average small-to-mid-sized company takes 25 days to process one invoice. You read that right, that’s nearly a month for a single invoice.

For an organisation processing dozens, hundreds, or thousands of invoices monthly, that turn-around time could never suffice. This is why so many businesses have become AP automation companies, so that they can streamline the AP process with the aid of accounts payable workflow automation.

Ready to start automating your finance processes? See how a tool like SolveXia can help to save you time, money, and headaches.